The two main events of the past couple of days may have contributed to the sharp fall of equities and commodities. These events include: The FOMC hinting it may ease down QE3 in the coming months; China’s credit squeeze, in which Chinese banks have lowered their lending volume. Following such a sharp fall in gold and silver prices, we might see a correction to these falls in today’s trading. On today’s agenda: Bank of Japan’s Kuroda Speaks, EU Current Account, Great Britain Net borrowing, ECOFIN Meetings, Canada’s core CPI and Canada Retails Sales.
Here is a short outlook for bullion for Friday, June 21st:
Precious Metals – June Update
On Thursday, gold tumbled down by 6.39% to $1,285; Silver also plummeted by 8.32% to $19.82. During June, gold fell by 7.66%; silver, by 10.82%.
In the chart below are the normalized rates of gold and silver for 2013 (normalized to 100 as of May 31st). The rates of gold and silver have sharply declined during June.
The gold and silver futures volumes of trade have sharply rose on Thursday to 390 thousand and 168 thousand, respectively – the highest volume of trade in the past several weeks. This high volume might decline today. If the volume will fall in the coming days, this could lead to a decrease in volatility of precious metals. The chart below shows the volume of trading gold and silver futures in the CME from the past several weeks.
On Today’s Agenda
Bank of Japan’s Kuroda Speaks: Bank of Japan Governor will talk at National Association of Shinkin Banks, in Tokyo. Considering the high volatility of Japan’s currency and the drop in the equity markets, his words could influence traders;
EU Current Account: This report will refer to changes in the difference between imports and exports. Last month, the EU’s current account surplus sharply rose to €25.9 billion;
Great Britain Net borrowing: this report will pertain to the monthly shifts in the public sector net borrowing for May 2013; as of April 2013, the net borrowing reached £8.0 billion;
ECOFIN Meetings: In this summit, the EU ministers of finance will talk about the latest developments in Europe;
Canada‘s core CPI: Based on the recent Canadian CPI report for April, the core CPI inched up by 0.1%. This report might affect the Canadian dollar, which is also strongly linked with gold and silver prices;
Canada Retails Sales: This report will refer to the retails sales in Canada as of April. In the recent report regarding March 2013, retails sales slipped by 0.2%.
Currencies / Bullion Market – June Update
The Euro/ USD fell again on Thursday by 0.56% to 1.322. During June, the Euro/USD increased by 1.70%. Further, other currencies such as the Aussie dollar also depreciated yesterday against the U.S dollar by 1.05%. The correlations among gold, Euro and Aussie dollar weakened again. If these correlations will continue to weakened, the changes in the currencies markets including the shifts to the Aussie, Euro and Japanese yen are likely to have a lesser effect on bullion rates.
Current Gold and Silver Rates as of June 21st
Gold (short term delivery) is traded at $1,291 per t oz. a $4.80 or 0.37% increase as of 05:49*.
Silver (short term delivery) is at $19.79 per t oz – a 0.17% decrease as of 05:49*.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
07:35 – Bank of Japan’s Kuroda Speaks
09:00 – EU Current Account
09:30 – Great Britain Net borrowing
All Day – ECOFIN Meetings
13:00 – Canada’s core CPI
13:30 – Canada Retails Sales
For further reading:
- Gold and Silver Outlook for June
- Will Gold Recover from its Recent Fall?
- Weekly Outlook of Financial Markets for June 17-21
- Gold and Silver Prices Outlook for June 17-21
- Gold and Silver Yearly Outlook For 2013